Most people, especially those from the middle and lower-income brackets, usually choose to buy a ready apartment or flat rather than build their own home.

This is because they cannot afford the land and other associated costs.

For example, the rising cost of construction materials makes it difficult for these people to develop their own property, which comes with a host of other challenges as well.

Middle to lower-income earners tend to prefer purchasing flats or apartments in localities close to their work and so, home loans from banks and non-bank financial institutions are the perfect financial solution for them.

Raju Ahmed, a private job-holder, and his family are living in a flat that he purchased with a blend of personal savings and home loans.

After accumulating Tk 8-10 lakh with great difficulty over a span of eight years, he took out a home loan to make up the rest of the amount for his apartment in Dhaka's Mirpur, where he has lived for the last three years or so.

In a bid to facilitate the home loan, Ahmed held talks with various banks and non-banking financial institutions (NBFIs) that told him he would require a minimum income of around Tk 50,000 to avails loans of up to Tk 15-20 lakh.

"I used to dream of purchasing an apartment even though I didn't have the required money but still, kept my words of dream in mind," he said.

"After a long-wait, I was finally able purchased my flat with the help of home loans," Ahmed added.

The wide range of options offered by banks and NBFIs in the country are designed to cater to the peoples' home financing needs, be it for purchasing a new flat, constructing one on their own or renovating existing properties.

However, one should look closely at the terms and conditions before striking any agreement for a home loan from any bank or NBFI. This includes the interest rate, processing fee, hidden charges, repayment tenure, and loan takeover fee.

"We normally finance home loans in two cases -- for the purchase of a ready flat or construction," said Md Kyser Hamid, managing director of Bangladesh Finance.

However, he went on to say that they provide more funds for construction than purchasing a ready apartment.

"In case of apartment or flat purchase, we give a 70-80 per cent home loan but we give 80-90 per cent in construction," he added.

Regarding the variable interest rate, Hamid, said since the interest rates are not fixed, they change on a half-yearly basis.

As per Bangladesh Bank rules, no one can strike a loan agreement with fixed interest rates.

And since home loans are usually long-term deals, the interest rate could be increased or decreased during its tenure.

"So, if the interest rate increases, we expand the repayment tenure period keeping the instalment amount the same and similarly, we adjust it with decreasing the rate if interest declines," Hamid said.

However, many banks and NBFI's keep hidden charges that people should be aware of before taking out a home loan.

"We don't put any hidden charge on home loans though as we know people approach the loan when they are not capable of affording the cost," he said, adding that they could form a tri-party agreement with another financial institution if needed by the client.

At the Delta Brac Housing Finance Corporation Ltd, there are no special requirements for non-government professionals as loans are approved based on the client's repayment capacity, according to Nasimul Baten, managing director of the lender.

"We offer home loans under the adjustable-rate home loan scheme but due to changes in money market conditions, the interest rates may go up or down during repayment tenure," he said.

Subject to being supported by repayment capacity, the company finances up to 80 per cent of a property's value as a home loan.

Md Mahiul Islam, head of retail banking at Brac Bank, said common documents which are required for availing home loan are: a copy of the applicant's national identification card, e-tin, utility bill of current residence, supporting documents such as a salary certificate, pay slips and bank statement, and property related documents.

Loan repayment can be made in the form of monthly instalments that offer the flexibility of choosing a convenient repayment period of between 5 to 25 years.

These monthly instalments can also be automatically debited from the client's personal account if their bank strikes a deal in this regard.

Interest is calculated on a monthly reducing balance as opposed to an annual reducing balance, giving you a lower monthly instalment amount with the bank. 

The lower limit of home loan is Tk 5 lakh and the upper limit is Tk 2 crore, as per central bank guidelines.